Probate is the court process of transferring property to the right people after a person dies. It sounds simple enough, but it is an expensive, time-consuming process that most people want to avoid. This article will focus on some of the most common ways of avoiding probate. To learn more about the probate process and costs, click here.
Small value estate
If a person dies after April 1, 2022 and has less than $184,500 in assets, those assets will not need to pass through probate. Rather, a beneficiary or heir can use what is called an Affidavit For Collection of Personal Property to collect personal property assets and/or a Petition to Determine Succession to Real Property to collect any real property assets. Compared to probate, both are quick, relatively inexpensive methods of obtaining property.
The $184,500 threshold is often updated to reflect inflation, so, over the years this value will increase. While each of these small value options are great for a person who did not have a high value estate, once a person owns a home or has other high-value assets, he or she will need to utilize another method to avoid probate.
Assets held in joint title or naming beneficiaries
Another way to avoid probate is to hold your assets jointly or to name beneficiaries. For bank accounts, vehicle title, and investment or retirements accounts, typically having a co-owner or a named beneficiary means that if a person dies on the account, the survivor or the named beneficiary automatically becomes the owner, without having to go through any sort of court process. In the case of real estate, the co-owner must be named as Joint Tenants with Right of Survivorship to avoid probate after one co-owner dies. With assets held jointly, or which have a named beneficiary, collecting the property can be as simple as filing paperwork with the local county Recorder or by contacting the financial institution and providing information about the death of the owner.
Downsides to this method is your assets could be subject to the co-owner’s debts, real property might be reassessed when you add a co-owner to title, and if you and the co-owner ever disagree about how to handle the asset while you’re alive, you might be forced to the sell the assets and split the proceeds 50-50. Additionally, you may or may not be able to account for contingencies, like naming multiple beneficiaries if your ideal beneficiary predeceases you.
Creating a living trust
Finally, one of the most common ways a person can avoid probate is by putting their assets into a living trust. Assets held in a living trust are typically not subject to probate. Several advantages of a living trust are that there is no asset cap that limits how much property you can put into a living trust, and your living trust is revocable, meaning you can change it or eliminate it altogether. Additionally, putting real property into a living trust will not trigger a reassessment of your property.
A living trust is often the most valuable estate planning tool a person can use, because it can save a person’s family tens of thousands of dollars by avoiding probate. If you think a living trust might be right for you, learn more here. Or give us a call at (530)885-7538.
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The information in this blog is intended only as general information, and under no circumstances constitutes legal advice, nor does it create an attorney-client relationship. The information should not be relied upon as a substitute for specific legal advice concerning your particular situation.
For advice specific to your situation, contact us to schedule an appointment.
About the Koons & Riswold Law Office
Koons & Riswold maintains an office in Davis, CA and Auburn, CA to provide clients with legal services in Auburn, Davis, and the surrounding areas. Our Auburn and Davis lawyers provide legal services, which include: Living Trust and Estate Planning services, Probate, Elder Planning, and Trust and Estate Administration. Our lawyers have deep roots in Northern California, having strong familial, community, and professional ties to the region.